Industry Focus | Weak consumption suppresses PTA prices

Recently, crude oil prices have fallen sharply, PTA costs have collapsed, and PTA futures prices have fallen below 4,000 yuan/ton and have continued to fall, hitting new lows since its listing.
Panic has eased
On the 23rd of this month, the Federal Reserve announced that it would buy U.S. bonds and MBS on demand without limit, and unlimited QE would be launched. In addition, the U.S. Senate reached an agreement on a bipartisan stimulus plan, and the scale of U.S. fiscal stimulus will reach $2 trillion. The Federal Reserve’s unlimited QE and the U.S. Treasury Department’s stimulus policies have eased the market’s panic about the liquidity crisis.
At the same time, the Texas Oil and Gas Commissioner claimed that if Saudi Arabia and Russia agree to limit crude oil production, Texas can also consider reducing crude oil production by 10%. This may boost the rebound of crude oil, thereby forming some support for PTA prices. However, the overseas epidemic has not yet peaked, and demand for crude oil continues to decrease. In addition, in order to compete for market share, major oil-producing countries have faced many obstacles in returning to the negotiating table.
Social inventory fell slightly
From the supply side, PTA equipment has been undergoing more maintenance recently. For example, Hengli 4# and Xinfengming (603225) started two-week maintenance, and the equipment load dropped to 69.7% last week. . The polyester load remained at around 80%, a significant rebound from the end of February. PTA social inventory fell by about 100,000 tons from a high of 3.5 million tons, and the basis strengthened slightly.
However, most equipment maintenance cycles last about half a month. Next week, the maintenance equipment will gradually restart and the load will rebound. At present, the spot processing difference of PTA has risen to around 630 yuan/ton, and the futures processing difference has risen to around 700 yuan/ton, indicating that companies are more willing to start production. The PTA market has always maintained a positive structure. Faced with high spot inventory and sales pressure, PTA manufacturers can still cooperate with arbitrageurs to withdraw funds in advance and lock in processing differences, thereby stabilizing production. Therefore, from the perspective of maintenance and processing differences, the load of the PTA device may increase.
Exports of textile orders are restricted
As various parts of the country promote the resumption of work and production, the downstream gradually recovers, and the operating rate of looms in Jiangsu and Zhejiang has returned to 73%, returning to normal levels. This may be due to the domestic rush to resume work and the early export rush. Order. At present, the COVID-19 epidemic in Europe and the United States is very serious, and it is difficult to say when it will peak. The demand for overseas textiles has plummeted. my country’s textile exports account for nearly 60%. Overseas demand is sluggish, domestic textile export orders have decreased, and domestic textile products are backlogged.
From the perspective of the polyester end, the current load has returned to a high level, and the inventory remains high. The inventory of each polyester category ranges from 30 to 35 days. Affected by the decline in export orders, the inventory and financial pressure of textile companies have increased. In the second quarter, the enthusiasm for starting operations will decline, and the operating rate of looms may decline. This will intensify the accumulation of inventory pressure in the polyester industry, thus forcing it to reduce its load.
In short, weak demand will still suppress PTA prices. At present, PTA trading fees have returned to a high level. In the context of negative basis, companies can actively use futures trading to lock in processing fees and avoid the risk of price fluctuations. </p